The WFII 2024 Midyear Outlook highlights economic and market
forecasts, favored sectors, top portfolio ideas for the next 18
months
Wells Fargo Investment Institute (WFII) today released its “2024
Midyear Outlook: Approaching the Economy’s Pivot Point,” which
explores WFII’s belief that the pivot to positive momentum at the
start of 2024 was driven by the combined forces of artificial
intelligence, anticipated Federal Reserve (Fed) rate cuts,
declining inflation, and the resumption of durable earnings growth.
WFII strategists remain confident that five key points will likely
continue to chart the market’s path forward over the next 18
months.
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Wells Fargo Investment Institute 2024
Midyear Outlook (Graphic: Wells Fargo)
- Inflation — Consumer Price Index inflation has decreased
from a high of 9.1% in June 2022 to a range of 3% – 4%. The U.S.
economy is slowing this year and should further cool inflation and
prompt Fed rate cuts. As we look out 18 months, our base case calls
for inflation to drift mildly lower but struggle to land the Fed’s
2.0% to 2.5% target.
- Interest rates — Coming into this year, markets
anticipated as many as five or six interest rate cuts. Now at
midyear, the market has shifted expectations and anticipates fewer
2024 Fed rate cuts and projects continued higher interest
rates.
- Liquidity — In the first half, we saw the effect of
government stimulus packages and a ballooning federal budget
deficit on asset prices as large amounts of liquidity were pumped
into the economic engine. That led to all-time highs in the S&P
500 Index, Japan’s Nikkei 225 Index, Germany’s DAX Index, bitcoin,
and gold. Even strong issuance of U.S. Treasuries and U.S.
investment-grade corporate bonds was met with robust demand as
liquidity actively searched for a home across all asset
classes.
- Earnings — Equity prices generally reflect expectations
for future earnings growth, and there is the potential for more
broad-based growth going forward. We expect earnings growth to
support additional gains over the next 18 months for the major U.S.
equity benchmark indices.
- Global landscape — Possibly the greatest potential for a
market-moving pivot comes on the world stage. The war in the Middle
East has escalated, and the war in Ukraine continues. Also, slowing
growth in China has been a headwind for emerging market equities,
and the U.S. dollar has remained stronger for longer than most
expected.
“As we recalibrate our outlook for the back half of 2024, our
guidance remains focused on high-quality investments in both
equities and fixed income,” said Darrell Cronk, chief investment
officer for Wells Fargo Wealth & Investment Management.
“Quality investments have performed well — and we expect that will
continue — as geopolitical risks, market volatility, and November
elections will have much to say about the path for markets in the
second half of the year.”
Highlights of WFII’s forecast include:
- The anticipated U.S. GDP (gross domestic product) growth target
for 2024 year-end is 2.5%, and 2.1% for 2025.
- The target for U.S. consumer price inflation in 2024 and 2025
is 3%.
- The S&P 500 Index price target range is 5,100 – 5,300 for
year-end 2024 and 5,600 – 5,800 for 2025.
- Two interest rate cuts are anticipated later this year and one
again in 2025. The Federal funds rate forecast for 2024 is 4.75% –
5.00% and 4.50% – 4.75% in 2025.
The full report provides guidance for investors to help navigate
the next 18 months, economic and market forecasts, where WFII sees
opportunity, and five portfolio ideas. Also included are insights
about equities, fixed income, real assets, and alternative
investments. Please see the full report for detailed
information.
Join the WFII 2024 Midyear Outlook call today, June 12 at 4:15
p.m. Eastern Time. Dial-in: 877-601-6604; Passcode: 71-306-44.
A summary of the WFII 2024 Midyear Outlook is available
(PDF).
Investment and Insurance Products
are:
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Not Insured by the FDIC or Any Federal
Government Agency
●
Not a Deposit or Other Obligation of, or Guaranteed by, the Bank
or Any Bank Affiliate
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Subject to Investment Risks, Including Possible Loss of the
Principal Amount Invested
Risk Disclosure
Forecasts and targets are based on certain assumptions and on
our current views of market and economic conditions, which are
subject to change.
All investing involves risks, including the possible loss of
principal. There can be no assurance that any investment strategy
will be successful and meet its investment objectives. Investments
fluctuate with changes in market and economic conditions and in
different environments due to numerous factors, some of which may
be unpredictable. Asset allocation and diversification do not
guarantee investment returns or eliminate risk of loss.
Stock markets, especially foreign markets, are volatile. A
stock’s value may fluctuate in response to general economic and
market conditions, the prospects of individual companies, and
industry sectors. International investing has additional risks
including those associated with currency fluctuation, political and
economic instability, and different accounting standards. This may
result in greater share price volatility. These risks are
heightened in emerging and frontier markets. Investments in
fixed-income securities, are subject to market, interest rate,
credit, liquidity, inflation, prepayment, extension, and other
risks. Bond prices fluctuate inversely to changes in interest
rates. Therefore, a general rise in interest rates can result in a
decline in the bond’s price.
The information contained herein constitutes general information
and is not directed to, designed for, or individually tailored to,
any particular investor or potential investor. This report is not
intended to be a client-specific suitability analysis or
recommendation, an offer to participate in any investment, or a
recommendation to buy, hold, or sell securities. Do not use this
report as the primary basis for investment decisions. Consider all
relevant information, including your existing portfolio, investment
objectives, risk tolerance, liquidity needs, and investment time
horizon.
About Wells Fargo Investment Institute
Wells Fargo Investment Institute, Inc. is a registered
investment adviser and wholly owned subsidiary of Wells Fargo Bank,
N.A., a bank affiliate of Wells Fargo & Company.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets. We
provide a diversified set of banking, investment and mortgage
products and services, as well as consumer and commercial finance,
through our four reportable operating segments: Consumer Banking
and Lending, Commercial Banking, Corporate and Investment Banking,
and Wealth & Investment Management. Wells Fargo ranked No. 47
on Fortune’s 2023 rankings of America’s largest corporations. In
the communities we serve, the company focuses its social impact on
building a sustainable, inclusive future for all by supporting
housing affordability, small business growth, financial health, and
a low-carbon economy. News, insights, and perspectives from Wells
Fargo are also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com
LinkedIn: https://www.linkedin.com/company/wellsfargo
PM-11282025-6650017.1.1
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Media Sarah Kerr, 917-588-5919
sarah.kerr@wellsfargo.com
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